Waiver of pre-deposit may follow when a CBEC circular supports a prima facie case on depreciation in a 100% EOU.

A prima facie case for waiver of pre-deposit may be established where the appellant's claim is supported by the applicable CBEC circular on depreciation for capital goods in a 100% EOU. The Tribunal noted that the department's objection was based on the view that March 1996 production was only trial production because of the small quantity manufactured, but the circular directed that the depreciation period runs from the date the capital goods are put into the manufacturing process until their clearance to the Domestic Tariff Area. On that basis, pre-deposit of duty and penalty was dispensed with and recovery stayed pending appeal.

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Issues: Whether the applicants had made out a prima facie case for waiver of pre-deposit and stay of recovery pending appeal.

Analysis: The applicants had exported the quantity produced in March 1996, and the departmental objection rested on the view that such production was only trial production because of the small quantity manufactured. The Tribunal relied on Circular No. 27/98 dated 21-4-1998 issued by the CBEC, which stated that the period of depreciation is to be counted from the date the capital goods are put into the manufacturing process in the 100% EOU up to the date they are sought to be cleared to the Domestic Tariff Area.

Conclusion: The applicants established a prima facie case for waiver of pre-deposit, and the pre-deposit of duty and penalty was dispensed with with recovery stayed pending appeal.

Ratio Decidendi: Where the appellant shows a prima facie entitlement supported by the applicable CBEC circular, pre-deposit may be waived and recovery stayed during the pendency of the appeal.

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